Splinter cell (quite a few years back) has pretty awesome cloth simulations (hanging curtains, shower curtains, blinds, etc.) but they were limited to 1 per current scene or performance took a massive nose dive, in the few scenes where there was 2-3 instances performance dropped by 2/3rds. With a GPU you could use that effect extensively throughout the scene.
I have no doubt that it would be possible to squeeze quite a bit more software performance out of physx with the right motivation but it would not be in any way comparable to high end GPU performance. A 260 at 756MHz v a Q6600 @ 3.6gig is between 20 and 60 times faster at doing physics depending on what kind of physics you have in the scene, even with some pretty heavy weight optimization to the software code for extensive effects its still going to be a minimum of 10x faster.